Most articles hand you a list and let you pick. That’s backwards. The exits below run in an order, because what you do in week one changes what’s available in month three. Do them out of sequence and you’ll pay for it.
The order that works: enforce the reconciliation your contract already promised, protect the account being drained, settle the balance, and keep recharacterization and bankruptcy in reserve for the files that need them.
1. Enforce reconciliation and cut the payment now
This is first because it’s free, it’s lawful, and almost nobody does it. Most MCA contracts promise that your payment tracks actual receipts, because that promise is what lets the funder call the deal a purchase instead of a loan. Funders ignore it constantly. Pull ninety days of statements, calculate what the contract formula actually allows, and send a written demand with the numbers attached. Funders take a documented written request far more seriously than a phone call, and refusing it undermines their own legal theory.
2. Protect the account before you change anything
If payroll runs through the account being debited, move payroll. Legitimately and transparently, to a different institution. Then revoke ACH authorization in writing if that’s the plan, but only after the reconciliation demand is on the record, so the file shows you asserted a contractual right rather than simply quit paying. Skip this step and your unilateral stop reads as a straight default.
3. Negotiate a lump-sum settlement
This is where most of the money is. A funder facing a defaulted account weighs a discounted check today against $15,000 to $30,000 in litigation and an uncertain recovery six to twelve months out. Attorney-led negotiation commonly produces reductions in the 30 to 60 percent range on the total balance, and funders regularly accept 40 to 60 cents on the dollar. Those are typical ranges reported across the industry, not a promise about your file.
4. Consolidate or restructure, with your eyes open
Five payments become one you can carry. Real relief, real tradeoff: consolidation stretches the obligation instead of shrinking it, and the total can grow. It also fails quietly if even one funder in your stack refuses to participate. Worth doing when the business is sound and dying of payment velocity. Get a settlement quote first so you know what the alternative was worth.
5. Refinance into cheaper capital
An asset-based line can take out an MCA stack if you have receivables, equipment, or inventory, with rates commonly in the 12 to 24 percent range because ABL lenders underwrite collateral rather than credit. Two hard limits. Most lenders decline at three or more open advances, and asset-based lenders generally won’t fund where existing UCC filings already cover the same collateral, so you’ll need subordinations or terminations from the funders first. That means negotiation happens before refinancing, not instead of it.
6. Legal challenge, and bankruptcy as the floor
Where the effective cost runs far past your state’s usury line and the contract has a fixed term with a payment that never flexed, recharacterizing the advance as a loan becomes a live argument. You probably won’t litigate it to a published opinion. You don’t need to. Funder counsel prices that risk in settlement. Below all of it sits Subchapter V, which carries a debt ceiling around $7.5 million that covers nearly every business using advances, stops collection instantly through the automatic stay, and runs roughly $15,000 to $35,000 in fees.
Taking another advance to service the ones you have. Every new position adds a UCC filing, another guarantee, usually another confession of judgment, and it kills your refinance eligibility. The broker offering it earns on the funding, not on your survival.
Three states now force the numbers into daylight. New York’s Commercial Finance Disclosure Law (23 NYCRR §600) requires APR-equivalent, total repayment, and finance charge disclosure. California’s SB 1235 (Cal. Fin. Code §22800 et seq.) does the same through DFPI enforcement. Utah’s Commercial Financing Registration and Disclosure Act (Utah Code §7-27-201) adds a registration requirement. If your funder skipped the disclosures your state requires, that compliance failure is leverage at the negotiating table. Funders do not want regulators reading their paperwork.
What to do this week
- Pull every agreement, including the ones you signed on your phone. All riders and addenda.
- Search each for reconciliation, confession of judgment, warrant of attorney, and Article 9.
- Pull your UCC filings from your Secretary of State and check the entity name character by character.
- Calculate your true daily and monthly outflow across every position, then compare it against gross receipts.
- Get the file in front of someone who works commercial paper before you change a single payment.
Getting out of an MCA is not a DIY project. The funders have lawyers. The contracts have confessions of judgment. Someone has to read your agreements, line by line. Our #1-rated firm does that on a free call. No upfront fees.